COOPERATIVE ORGAXIZATTOX BY-LAWS. 11 



Clayton Act, will have to change their form of organization and the 

 manner of conducting their business, if they desire to obtain the 

 benefits of the exemption provided by that section. No hard and 

 fast rules for making this change can be laid down, as the exact pro- 

 cedure depends largely on the laws of the State in which the organi- 

 zation is incorporated. The first step should be to ascertain whether 

 or not the State laws provide for the incorporation of organizations 

 formed in accordance with section 6. If so, the details of the manner 

 of changing from the existing form should be ascertained. The by- 

 laws, of course, will have to be changed to comply with the new form 

 of organization. It is likely that in most instances the old organi- 

 zation will be dissolved and a new organization formed. If so, a new 

 set of by-laws can readily be adopted. 



The questions arising in connection with the transferring of the 

 property from the old association to the new organization are likely 

 to prove perplexing in many cases, especially where the old organi- 

 zation is formed on the capital-stock plan. There are various ways 

 of adjusting this matter, and the best method will depend on the 

 character of the organization and local conditions. A plan which 

 may be followed where the value of each share of stock in the old 

 organization is small and the shares are uniformly distributed among 

 the members is to issue paid-up memberships in the new organization 

 in exchange for the shares in the old and in this way eliminate the 

 capital stock. Thus, if the value of a share in the old organization 

 is $10 and each member has one share, the membership fee in the 

 new organization can be placed at $10. If the value of a share in the 

 old organization is $25 and the annual fee in the new association is 

 placed at $5, each shareholder may be credited on his annual dues 

 for five years. The difficulty lies in the fact that the shares of stock 

 usually are not uniformly distributed. Thus, one member may have 

 only 1 share and another member have 20 shares. In such a case 

 the method outlined would prove impracticable. Should the mem- 

 bership in the new organization be considerably larger than the old, 

 it may be possible with the receipts from the membership fees of new 

 members to purchase from the old members the extra shares, at their 

 actual cash value, and cancel them. 



Where the property holdings are extensive and the capital stock is 

 large, some other method of transferring the property is likely to prove 

 more feasible. In some cases it may be found advisable not to dis- 

 solve the old organization, but to let that corporation continue as 

 the owner of the property. The new organization can then lease the 

 property from the old association, paying sufficient rental to provide 

 for depreciation and a fair rate of interest on the investment. If so 

 desired, the old association can be dissolved and the new association 

 can purchase the property, when authorized as necessary for the 

 conduct of its operations, paying for it on the installment plan. 



